IIS 7.5+ runs application pools using an Application Pool Identity rather than NETWORK SERVICE. To allow files to be created/modified you may need to change file permissions.
1. Open Windows Explorer
2. Select a file or directory.
3. Right click the file and select “Properties”
4. Select the “Security” tab
5. Click the “Edit” and then “Add” button
6. Click the “Locations” button and make sure you select the local machine. (Not the Windows domain if the server belongs to one.)
7. Enter “IIS AppPool\DefaultAppPool” in the “Enter the object names to select:” text box. (Don’t forget to change “DefaultAppPool” here to whatever you named your application pool.)
8. Click the “Check Names” button and click “OK”.
Note: Depending on IIS configuration you may need to add permissions for the application pool itself. Repeat the above steps but change AppPool\DefaultAppPool to AppPool\MyApplicationPool where the application pool is called MyApplicationPool